SHIPPING TO THE PHILIPPINES

Southeast Asia (SEA) has been heralded as the next land of opportunity for eCommerce. With fast-growing markets like Indonesia looking ripe for cross-border sales of your eCommerce goods, it would ideal for your shipment to sail through customs, reaching your customers safely and on time.

Dealing with customs in Southeast Asia could be challenging seeing that each country has its own set of customs regulations, import duties, paperwork and taxes that need to be complied with.

With the Philippines’ dynamic customs environment, it helps to stay afloat of any changes to the rules and regulations.

The Philippines’ eCommerce market value is US$3.3 billion at present and is expected to grow to US$6.6 billion by 2024 according to Statista. Google and Temasek has a more optimistic forecast, pegging the value at US$ 12 billion by 2025.

The growth of this industry has been driven by the continuous increase in the number of consumers as well as the average revenue earned per consumer for eCommerce. Furthermore, consumers are also spending more – an opportunity for online businesses to consider when expanding to the Southeast Asia region.

With Metro Manila being the most developed city in the Philippines, you can expect plenty of eCommerce action in this place. Download speeds in Metro Manila are about 73 per cent faster than other regions in the Philippines like Cebu and Davao, and is the most densely populated city in the world with 42,857 people per square kilometer.

This is a living page that will frequently be updated with insights about:

• The Philippines’ Customs Clearance Basics
• How to Ship to the Philippines from Various Countries
• The Philippines’ eCommerce Insights

PART 1: CUSTOMS CLEARANCE IN THE PHILIPPINES

1. The Philippines’ De Minimis Rate, Import Taxes and Customs Duties

The Philippines maintains a de minimis value threshold of PHP10,000 on inbound B2C eCommerce goods.

The de minimis rate is a threshold where lesser or no taxes are levied on goods entering a country. In the Philippines, import valuations takes into account the CIF value, which means your goods’ value, shipping fees, and insurance costs if any.

With that said, this exemption only applies to goods entering the country via air freight. So imports entering the Philippines via sea freight will still be subject to import duties and taxes.

The import duties and taxes vary depending on the product’s Harmonised Systems Tariff Code (HS Code). To find out these rates, you may browse through the Philippines’ Tariff Commission.

Source: Worldometers | Rappler | World Population Review | Statista (2020) | Philippines Customs| Asean Up (2019)

2. Restricted and Prohibited Goods

Restricted and Forbidden Goods

Restricted items that must meet certain conditions before going through customs clearance:

• Firearms and explosives
• Devices used in gambling or the distribution of money, cigars, cigarettes or other goods when such distribution is dependent on chance
• Narcotic drugs
• Opium pipes, and more

Prohibited items that cannot be imported into the market:

• Written or printed goods that incite treason, rebellion, insurrection, or sedition against the Philippine government
• Goods and materials that are designed for producing unlawful abortion
• Goods that represents an obscene or immoral character
• Goods manufactured in whole or in part of gold, silver or other precious metals/alloys, and the brand does not indicate the actual fineness of quality of the material, and more
• Adulterated or misbranded food, drugs or goods for human consumption

This list may change depending on government regulations. Visit the official customs page for the latest version.

3. Required Customs Documents

Documents required by Philippines’ customs clearance include:

1. Packing List

This gives product details, shipment volume in kilogram or cubic meter, and serves as a checklist to ensure shipment has been packed correctly or not.

2. Commercial Invoice

This gives total shipment value usually in US dollar. Helps to determine the import duties and taxes, and eligibility of shipment.

If you are shipping without a logistics partner that can clear customs on your behalf, you may need to include the following shipping documentation as well:

• Certificate of origin
• Bill of lading or airway bill
• Insurance policy
• Other relevant permits, licenses, and certificates

To find out how customs clearance works in a dynamic region like this, check out our guide to Southeast Asian Customs Clearance!

PART 2: HOW TO SHIP TO THE PHILIPPINES FROM VARIOUS COUNTRIES

Shipping from one country to another, be it an eCommerce delivery or a full container moved via sea freight follows a general set of steps:

• First Mile Delivery in the Origin Country
• Origin Country Customs Clearance
• Mid-mile or Freight
• Customs Clearance in the Philippines
• Distribution and Last-mile delivery in the Philippines

You can click on any of the links above to find out more about each step. Alternatively, you could also read our mini guide on how to ship to the Philippines.

Different countries have different steps at origin customs clearance and different freight modes. To find out more about these for specific origin countries, check out our posts below:

• Ship from Singapore to the Philippines
• Ship from Malaysia to the Philippines
• Ship from Indonesia to the Philippines
• More on the way!

First-mile Delivery in the Origin Country

The first-mile stage in international shipping refers to the first stage of the shipping supply chain, where it either leaves the merchant’s address, be it a storefront, office, or warehouse. Prior to your goods leaving your storage facility, the product has to be packaged and labelled appropriately to facilitate smooth cross border shipping.

Great preparation can help minimise the chances of your shipment going missing or getting damaged during delivery. Generally, you’ll want to do the following:

• Engage the right shipping partner
• Packaging your products
• Choosing the right service levels
• Providing shipping details
• Printing and attaching shipping labels and documents to your package(s)
• Hand over shipment to carriers

If you’d like a more in-depth to each of these steps, you can find more at this preparation guide for merchants.

You can also find out more about what the first mile entails in our first-mile article.

Origin Country Customs Clearance

As your shipment arrives at the origin country’s port or airport, the parcel would need to be cleared by local customs for export. This is where the customs officers will inspect the parcel’s contents and shipping documents. If you’re planning to ship with B2B, you may want to check if you need to produce specific customs documentation for export on your local customs websites. You can find a list of these on our Customs Clearance in SEA resource page.

Freight or Mid-mile to the Philippines

When it comes to freight options, shipping your goods to the Philippines can generally be done in two ways – air freight and sea freight.

For merchants shipping B2C parcels, air freight is the faster option, especially if you don’t have a consistent order volume and need your parcels to reach the destination country quickly.

On the other hand, sea freight is generally more cost-effective for shipping in bulk. However, it is slightly slower than air freight. When managing your inventory, you’ll need to take into account the estimated delivery date so that you can plan out your supply chain accordingly.

Customs Clearance in the Philippines

Once your item arrives in the Philippines’s airport or port, your shipment will be transported into a customs warehouse for clearance. This is where the customs officers will inspect your parcel and shipping documents and determine if your product is allowed to enter Singapore.

To clear customs for import into the Philippines, you or your shipping partner would generally need to provide the following documents:

• Certificate of origin
• Master airway bill or bill of lading
• Insurance policy
• Receipt of payment of import duty and import-related taxes
• Other relevant permits, licenses, and certificates

More information about this is available in this guide’s customs clearance section.

Distribution and Last Mile in the Philippines

Once your shipment has cleared customs, it will enter the distribution stage of the shipping journey. Your B2B shipments can be delivered directly to its destination. However, B2C parcels need to be at a transport hub to sort them out before the last mile journey can begin.

The last mile delivery stage is where your parcel will be sent from the destination warehouse to your consignee’s address. In the Philippines, this stage of the delivery is done using vans or motorcycles. If the address is inaccessible via roads, an additional domestic flight or ship is needed prior to entering this stage.

During the last mile delivery stage, your logistics service provider will ensure that your shipment is received by your consignee.

Different countries have different steps at origin customs clearance and different freight modes. To find out more about these for specific origin countries, check out our posts below:

• Ship from Singapore to the Philippines
• Ship from Malaysia to the Philippines
• Ship from Indonesia to the Philippines
• More on the way!

Our next section covers the Philippines’ eCommerce insights to power your online promotions and campaigns.

PART 3: PHILIPPINE ECOMMERCE INSIGHTS

Why Philippines? Key stats of the Philippines’ eCommerce market

The Philippines’ eCommerce market value is US$3.3 billion at present and is expected to grow to US$6.6 billion by 2024 according to Statista. Google and Temasek has a more optimistic forecast, pegging the value at US$ 12 billion by 2025.

With a high internet adoption rate, the Philippines’ eCommerce industry is poised to grow rapidly in the upcoming years.

But what else is causing the growth of eCommerce in the Philippines?

3 Major Factors Driving eCommerce In the Philippines:

1. A Growing Middle Class

• According to the World Bank, the Philippines sustained an average annual growth of 6.3% from 2010 – 2018, up from an average of 4.5% from 2000 – 2009 and is on its way to becoming an upper-middle-income country (US$ 3896 – 12,055) in the near term.
• The World Economic Forum predicts that Philippine’s middle-class segment will outspend Italy’s middle class by 2030. This segment consists of tech-savvy millennials, the oldest of whom are holding managerial positions.
• Poverty declined in the Philippines from 26.6% in 2006 to 21.6% in 2015 while the Gini coefficient declined from 42.9 to 40.1. Lower Gini coefficients mean lower levels of income inequality.

2. Growing Government Support

Department of Trade and Industry (DTI) developed the Philippine eCommerce Roadmap 2016-20209. Its primary goal is to get online business activities to account for 25 per cent of the country’s GDP by 2020, up from 10 per cent in 2015.

• Infrastructure – improving Internet access, eGovernment systems, eBanking, ePayment, tax systems, consumer protection, and logistics
• Investments – supporting and promoting opportunities such as foreign direct investment and capital flows
• Innovation – helping digital startups enter the commercial market

3. Convenience of a Digitalised Shopping Experience

• The Philippines is a mobile first country, with a population that skews towards a young, tech-savvy group of Millennial and Gen Z shoppers. (Average age of 25.7 years)
• These users spend 10 hours and two minutes browsing the Internet each day. Nearly half of that time—four hours and 12 minutes—is spent on social media.
• 67 per cent of the population are mobile internet users

We dive much deeper into these three factors in both our downloadable Philippines guide and also our overview on Philippine eCommerce drivers.

Sources: Google & Temasek | Hootsuite/We Are Social | World Bank | World Economic Forum

Who are the Philippines’ Online Shoppers?

Why do Filipinos Shop Online?

In 2015, an eCommerce study by Visa found that Filipino consumers shopped online for the following reasons:

1. Convenience of not lining up at brick-and-mortar stores
2. Better Prices than brick-and-mortar stores
3. Exclusive Deals Online

This focus on pricing might make it difficult for you to compete with local, more affordable products, but if you can improve the efficiency and reduce the cost of your cross-border or international shipping, it may be possible to offer competitive deals on international products thanks to the savings generated.

What influences Filipino online shoppers?

Promotions are a huge draw for Filipino online shoppers:

• Research by DAN Philippines and eConsultancy shows that these consumers demand value for money and great shopping experiences
• This doesn’t mean they’re conservative shoppers, the average basket value in online shopping in the Philippines is the second highest (US$56) in Southeast Asia

Filipinos take their time to decide what to buy:

• Filipinos perform six to seven searches before arriving at a purchase decision
• 90 per cent Internet users in the Philippines searched for a product or service online to buy
• Most of these research activities take place on social media

Filipinos like to pay in cash:

• According to the Philippine Central Bank, 99 per cent of all transactions are cash- and paper-based
• This is why it is also on a campaign to increase cashless transactions by up to 20 per cent over the next few years
• You’ll want to offer Cash-on-delivery as an option if you’re planning to sell your products online in the Philippines

We take a deeper look at Philippine consumer behaviour in our article on Philippines’ online shoppers.

Sources: Businessworld | Hootsuite/We are social | Visa

Top eCommerce Product Categories in the Philippines

Consumer electronics

• Research by Nielsen shows that Gadgets & Electronics are the top eCommerce product category in the Philippines, accounting for 33 per cent of online purchases.
• Statista shows that Electronics & Media is the country’s largest eCommerce market segment with a market volume of US$270 million in 2019
• Two of the top three best selling products on Lazada11 within 12 hours of launching its 11.11 shopping festival in 2018 were smartphones: the Xiaomi Redmi S2 and the Pocophone F1

Fashion

• Fashion is another huge market in the Philippines, with a revenue of US$227 million in Digital 2020’s report
• Nielsen’s findings show that shoes and apparel are the second leading product category 8 with a market share of 28 per cent.

Health & Beauty

• According to Statista, the personal care market is estimated to generate 267 million in sales in 2020
• Health & Beauty is among one of the best selling product categories on eCommerce marketplaces like Lazada
• During Lazada’s 11.11 sales period in 2018, 19 brands like Maybelline, L’Oreal Paris, MAC, Benefit, Olay, Nivea, Pond’s, and Garnier generated the most sales in this category.
• A report by the United Nations International Trade Statistics Database, showed that South Korean exports of cosmetics to the Philippines have grown by an average of 35 per cent per year since 2010

This is a summarised version of one of our articles on Singapore’s top products. To find out more, take a deep dive into the Philippines’ top three product categories in eCommerce.

Sources: Hootsuite/We Are Social | Revu | Nielsen | Statista | Entrepreneur

Payment Methods & Popular Online Shopping Platforms in the Philippines

Payment Methods Available in Philippines

Financial inclusion factors and online payment behaviour in the Philippines

• 32% have an account with a financial institution
• 1.9% has a credit card
• 4.5% has a mobile money account

Preferred payment methods in the Philippines:

• According to the Philippine Central Bank, 99 per cent of all transactions are cash- and paper-based
• The bank is also on a campaign to increase cashless transactions by up to 20 per cent over the next few years

Popular Online Shopping Platforms in the Philippines

Marketplaces

• Different marketplaces in the Philippines have different specialisations and cater to different demographics.
• In Q3 2019, these were the top 5 marketplaces in the Philippines in terms of monthly pageviews:
  - Lazada
  - Shopee
  - Zalora
  - Argomall
  - eBay
• Depending on the platform, sellers may include both SMEs and individuals (either B2C or C2C sellers), and even the eCommerce company’s in-house products.

More information about payment preferences and popular online platforms can be found in our article on the Philippines’ online shoppers.

Sources: Hootsuite/We Are Social | iPrice

Major Online Sales Events in the Philippines

Q4, especially the months of November and December, is the busiest shopping period in the country. Aside from that, Filipinos also make more purchases in the summer months of March, April, and May.

Online Revolution

• The Online Revolution campaign is an adaptation of Lazada’s 11.11 sale extending all the way to 12.12
• While the biggest deals are offered on 11.11 and 12.12, this event is a month-long sale
• Within the first hour alone, Lazada reported that one million products had already been sold in 2019’s 11.11 sale

Christmas

• A Facebook Holiday Study revealed that Filipinos tend to spend an average of ₱17,000 during Christmas
• The Philippines is said to have one of the longest Christmas seasons in the world, with malls playing Christmas songs and advertisers beginning to tease promos as early as September
• Rappler found that 55 percent of their readers identified December as the heaviest shopping month

Summer

• With Catholics making up more than 86 percent of the Philippine population, Holy Week is widely celebrated in the country, and also an opportunity for Filipinos to travel
• During Holy Week and the summer months, Filipino online shoppers are most interested in apparel and home appliances, according to iPrice Group
• Summer shopping generally peaks around Labor Day. Lazada, for example, holds a Labor Day sale together with partners, such as banks

Other popular shopping seasons include:

If you’d like to find out more, we cover each of these periods in more detail in our post on the Philippines’ major online shopping events.

Sources: International Trade Association | Lazada | Facebook | Rappler | Asia Society | iPrice

Non-working days in 2020

Saturday, Sunday and public holidays are non-working days. Please expect shipment delays on these days.

List of public holidays:

The Philippines’s Top Import and Export Partners

Exports

Imports

Sources:  Office Holidays (2020) | Euromonitor International “Economy, Finance and Trade: the Philippines” (2018)